Deferral of payments without supporting documents — what help will population and business receive during emergency state in the country?

Thursday, 02 April 2020, 20:40:20

Deputy Chair of the Agency of the Republic of Kazakhstan for Regulation and Development of the Financial Market Nurlan Abdrakhmanov spoke about the measures taken to support the population and business during the state of emergency.

The Agency of the Republic of Kazakhstan on Regulation and Development of the Financial Market in implementing the instructions of the President of Kazakhstan, has taken a number of measures to support the population and entrepreneurship during the state of emergency.

“The Agency adopted a resolution, then an additional provision was adopted, approved by the order on suspension for three months, that is, from March 16 to June 15, 2020, of the repayment of the main debt and interest,” Abdrakhmanov said.

So, individuals who belong to socially vulnerable segments of the population, either recipients of TSA, or are officially unemployed, can receive a delay in payment of principal and interest without an application, without providing supporting documents and without signing additional agreements.

“The suspension is made without submitting any documents, only on the expression of their consent. The banks through mobile applications, via SMS, notify this category of people that they are granted a deferment. From March 16 to June 15, on any business day from this period, entrepreneurs can apply to banks for suspension of payments,” the deputy chair explained.

For those citizens who do not belong to socially vulnerable segments of the population or to recipients of targeted social assistance or to unemployed and other citizens. The order is as follows:

“They submit an application in which they indicate one of the reasons for the deterioration of the financial situation, again all this is done remotely, without signing any documents or contracts, without submitting supporting documents and it is enough to send a message to the bank in which they indicate the reason for the deterioration of the financial situation," explained Abdrakhmanov.

It is necessary to write a statement indicating the reasons for the deterioration in financial condition, such as:

temporary disability due to the introduction of quarantine;

stay on unpaid leave;

dismissal, termination of the employment contract and termination of other labor relations;

reduction or suspension of payment of wages or other income;

in case the employee cannot be present at the workplace due to restrictions on entry (exit) into the area on the territory of which the state of emergency and (or) quarantine are in effect; other reasons indicating a deterioration in financial condition.

“Here I should note that banks should consider the application within 10 business days, but in fact they are processing much faster. The Bank may refuse if they have information that the financial situation of the borrower has not deteriorated,” the deputy chair said.

The introduction of a state of emergency in the Republic of Kazakhstan related to the spread of coronavirus infection negatively affects the financial situation of individual entrepreneurs and small and medium-sized businesses. Disruptions in the supply of goods and raw materials, a decrease in demand for manufactured and sold products, and a decrease in cash flow are only part of the difficulties that business owners face today.

“We clearly understand the need to support business, and accordingly, the country's economy as a whole, in the current situation. And therefore, for business, we approved the rules for suspending payments of principal and interest on a loan, subject to one of the conditions,” said the speaker.

Implementation of activities in the following sectors of the economy: trade, including tenants of shopping and entertainment centers; consumer goods stores; supply chain of goods, with the exception of grocery stores, pharmacies and related supplies; sport; tourism and hotel business, including tour operators and travel agents; passenger and freight transport sector, with the exception of food and medicine; catering sector, including restaurants and cafes; household services sector; organization of leisure and recreation, including theaters, cinemas, photo and video shooting, exhibitions and conferences, organization of celebrations, beauty salons and fitness centers.

Or whose financial condition worsened, when confirming a decrease in the volume of goods and (or) services sold; delays, suspension, postponement (delay) of payment from buyers; reduction in the number of employees; for other objective reasons during the state of emergency.

Thus, individuals and legal entities can submit an application at any time from March 16 to June 15, 2020, 10 working days are given for its consideration by a financial organization.

Between March 16 and June 15, 2020, financial institutions will not charge the borrower fees and other payments for considering applications for suspension of payments and amending the relevant agreements.

Preferential lending program for SMEs

In connection with the pandemic of coronavirus infection and its negative impact on the economy of Kazakhstan, in order to support small and medium-sized businesses, individual entrepreneurs affected by the state of emergency, on behalf of the president, the National Bank and the Agency for Regulation and Development of the Financial Market developed a soft loan subjects of small and medium business.

As the deputy chair of the Agency on Regulation and Development of the Financial Market noted, 600 billion tenge is allocated for the implementation of this program to small and medium-sized enterprises and individual entrepreneurs through the placement of conditional deposits in second-tier banks.

“The business support mechanism is implemented by providing second-tier banks with soft loans for working capital replenishment to small and medium-sized enterprises, individual entrepreneurs who suffered as a result of the state of emergency, for up to 12 months at a rate of no more than 8% per annum. The term for the utilization of funds by second-tier banks is three months,” Abdrakhmanov said.

Restrictions for small businesses up to 3 billion tenge, for individual entrepreneurs — up to 50 million tenge.

Verification of non-banking organizations

“Many issues with their activities received a resonant social effect, therefore, for our part, together with interested state bodies, we adopted an audit plan. We will start implementation as soon as quarantine is completed. We have identified 1,100 pawnshops, about 50 online lending companies and 200 subjects of microfinance facilities for inspection,” Abdrakhmanov informed.

Inspections will take place from March to June 2020, in 17 cities, the main share of checked pawnshops will be in the cities of Nur-Sultan, Almaty, Shymkent, where the largest number of microfinance organizations is concentrated.

Thirty-nine inspection groups were formed with the participation of employees of the Agency, the Ministry of Internal Affairs, the State Revenue Committee of the Ministry of Finance.

First of all, the inspection groups will carry out an audit to verify that the President’s order to suspend payment of the principal debt and interest on loans from the population, small and medium-sized businesses affected by the state of emergency has been fulfilled.

The audit will also verify compliance with legislation regarding the fight against money laundering and terrorist financing, the organization of a financial pyramid, the requirements for the debt burden ratio, the size of the annual effective interest rate and the maximum interest rate on microloans, the correctness of the calculation of fees, fines and penalties, the order of priority for debt repayment microcredit.